https://www.healthline.com/health/an...ety#peppermint
I might try some of this this afternoon.
Printable View
https://www.healthline.com/health/an...ety#peppermint
I might try some of this this afternoon.
Have to take my hat off to the team. They really are alternative in lending but do it with a little class...
Access Community Health
Access Community Health is a leading provider of home based healthcare and support. Care for our community | Work together | Do the right thing | Look after each other.
I already got enough of it I think but this Access Comm. Health tie up is yet another gut feel sign that I should get more.
Whereas I had specified base year earnings figures at EOFY2019, I am using figures from six months later for O4B. Why is that? It is because O4B is a very fastly growing part of the HGH business and I think the EOFY2019 figure would have been too conservative as a base figure from which to derive future earnings
Time to update where I thought things were going for O4B in May with what has subsequently (and eventually) been revealed in the annual result.Quote:
Heartland has been earning an ROE of more than 15% on this O4B portfolio.
If O4B sinks, then the annual tax profit loss for Heartland will be about:
0.15 x $158m = $24m
That is likely an overestimate as O4B also offers partially secured loans of up to $250,000 (well beyond the $100,000 limit of the NZ government scheme) and secured and unsecured loans into Australia. Those boundaries are beyond the IRD scheme. I would estimate the actual annualised profit hit to be 80% of my calculated figure, or around $19m. I estimate the IRD loan scheme may have brought forward about three months worth of loan applications that otherwise might have gone through O4B. If the IRD scheme is dropped on 12th June as planned, then the impact flowing into FY2021 may only be a couple of months. That equates to a reduction in FY2021 profit of $19m x 2/12 = $3.2m.
If the remaining 'outside of government scheme boundary' loans profit of $5m were to sink by 10%, then that would knock $0.5m off annual profits going forwards.
Likewise if the residual O4B loan profit balance of $19m- $3.2m = $15.8m were to reduce by 10%, that would wipe $1.6m off annual profits.
Now putting these three effects together, the expected annual profit decreases from the base year of FY2019 are as follows:
FY2021: -$3.2m - $0.5m - $1.6m = -$5.3m
FY2022: - $0.5m - $1.6m = -$2.1m
There were $133m of 'Open For Business' (O4B) loans on the Heartland books at EOFY2019 (p15 AGM Presentation FY2019). That loan balance increased by $25m at the half year point (p9 HY2020 Presentation). But the annual increase had decreased back down to +$22m increment by FY2020 balance date (for a total of $155m). Those who only looked at the year to year increase in O4B balances only saw good news. But take in that half year peak figure from December 2019 and the signs are my much speculated slide has already started. Or was 'the slide' just a three month Covid-19 shock glitch that will all go away?
In the interim to EOFY2020, and using an ROE figure of 15% for O4B loans (p15 AGM Presentation FY2019), we got an incremental NPAT boost for FY2020 of:
0.15 x $22 = $3.3m
A $22m increment to the O4B overall loans balance is equivalent to a $22m/$133m = 16.5% jump in the overall O4B loan book over FY2020. To get back down to FY2019 levels again would require a drop in the loan book size of $22m/$155m = 14.2%. So my 'base line middle case prediction' on the business loan book size for FY2021 is that it will be: 10% + 14.2% = 0.9 x 0.858 = 0.772 = 23% lower at EOFY2021 than it was at EOFY2020.
I was forecasting a proposed 'one off shock' at the end of FY2020 which looks to have happened. My forecast EOFY2021 decline of 10% for the O4B receivables from an EOFY2019 base level, is equivalent to a 23% fall from the EOFY2020 base level. Too harsh?
I see from the IRD website:
https://www.ird.govt.nz/covid-19/bus...cash-flow-loan
-------
Latest developments
The Small Business Cashflow (loan) Scheme has been extended until the end of 2020. Applications opened on 12 May 2020 and can now be submitted up to and including 31 December 2020.
-----------
So I think I am justified in holding my assumptions about the decline in O4B. No small business owner in their right mind is going to get a business loan from Heartland if they can get one from the IRD at 0%. That means very little new O4B business will be written for the first half of FY2021 at Heartland Bank!
SNOOPY